Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

Buenos Aires’ hinterland rose dramatically as immigrants came to farm. In thirty years,
Argentina moved from having essentially no cereal production to becoming one of the world’s
three largest grain exporters.
The roots of this transformation also lay in better transportation technologies. Across the
Atlantic, faster and faster steam ships made it cheaper to ship grain. Starting in the 1850s, a rail
network was created within Argentina, generally supported by the government and mostly
connecting Buenos Aires to places in the hinterland. (In yet another interesting parallel, just as a
New England-born shipping magnate, John Murray Forbes, built some of the first rails that
connected Chicago, a New England-born shipping magnate, William Wheelwright, built some of
the first rail tracks in Argentina.) Rail allowed population to disperse through the hinterland, and
it also brought goods into Buenos Aires to be processed and shipped out; quite crucially, it made
it less expensive to ship grain to the capital. While cattle and sheep could walk on their own to
the port, grain always needed to be shipped. As a result, grain particularly benefited from the
improvements in rail.
In sum, like Chicago, Buenos Aires initial attraction was its harbor and waterways – the River
Plata was an avenue into the interior – located next to an exceptionally fertile hinterland. The
rail network, which centered at the capital, only increased Buenos Aires’ place at the hub of
Argentina’s internal transport network, just as rail only increased Chicago’s importance in the
Midwest. The comparison did not escape contemporary observers, such as U.S. Trade
Commissioner Herman G. Brock, who noted that “like Chicago, [Buenos Aires] has all the
resources of the broad pampas at its doors and is the terminus of a dozen railways whose
network of transportation covers the Republic from north to south and east to west, all feeding
directly or indirectly into the capital.” (Brock, 1919, p. 13)
By 1910 both Chicago and Buenos Aires were “nature’s metropolises.” Both cities had grown
great as conduits that moved the wealth of American hinterlands to more densely populated
markets. In both cases, beef and wheat played a disproportionate role in the commerce of the
cities. In both cases, improved shipping technologies, especially refrigeration, enabled the cities
to grow.
Yet the 20 th century time paths of these places were quite different. By population, Buenos Aires
grew faster, but by most other measures of progress Chicago dramatically passed its southern
rival, just as the income gap between the U.S. and Argentina widened. Is it possible to see, in
the differences between the two cities a century ago, the roots of their 20 th century divergence?
III. Four Differences between Buenos Aires and Chicago in 1910
In this section, we discuss four major areas in which Buenos Aires and Chicago differed a
century ago. In the next section, we connect these differences to the history of the cities and
their countries since then.
Incomes